tv Squawk on the Street CNBC August 12, 2013 9:00am-12:01pm EDT
joint venture, partnerships is or a full sale of the company. that stock up almost 10%. before we go, we should thank our guest host. and we have no time. thank you. it was wonderful to see you. come on back. >> i'll be back. thanks for having me. >> scott, thank you. >> that does it for us. make sure to join us tomorrow. right now time for "squawk on the street." ♪ the boys are back in town ♪ i said the boys are back in town ♪ ♪ the boys are back in town >> all right. that's for us, i guess. good morning, welcome to "squawk on the street." i'm david faber with jim cramer. we're live. the week begins with concerns with slowing economic growth. japan, the country's second quarter gdp came in below expectations. that news has put pressure on futures. as you can see there. and pressure on european market, i believe. at least the last time i
checked. let's take a look and see if that still holds. yes, it does. not significant declines but declines nonetheless across the board. as for asia and japan, japanese gdp it did pressure the nikkei there to the tune of 4.7%. the chinese government offering financial stimulus to towns to maintain economic growth. signs of life there in the chinese economy. let's get to our road map this morning. that does start with the s&p. which is sitting just under the key technical level of 1700 but setting up to expend a multiday losing streak. blackberry replies all, says it's open to exploring strategic alternatives. jcpenney mulling action against bill akman for turning deliberations into a public discourse. and we have a date.
apple's new iphone will be unveiled on september 10th. we're coming off a week in which the dow industrials broke a six-week winning streak. this morning as we saw futures lower on that news out of japan where second quarter gdp rose 2.6%, that's well below economic forecasts. we haven't had a chance to talk, at least on camera. we did communicate a bit. >> yes, we did. >> you were rightfully so taking a real vacation. >> first time, first time in maybe three or four years. >> you want me to fill you in on what happened? >> i did a download this weekend. japan made a big mistake. they reported those results during breaking bet, so just irrelevant. it wasn't until the morning that the futures turned down. this over propensity to look at japan is nuts. you mentioned that china had a little stimulus. listen, china is far more important, okay? and europe is far more important in the sense of all the data we've been getting from europe. so those who were trading off japan, that's been a frequent
and mistaken trade. it tends not last past 11:00, 11:30 any more. >> let's talk japan, though, briefly. because they're in the midst of an experiment. an interesting one to watch. abenomics. but it is slowing. you say, nah, don't worry about it? >> no, look, they'll put out more stimulus. the point is that this world is driven by the united states, china and europe. now we can overemphasize japan and his experiment. you know what? it is an experiment. maybe it's important. mike crum bought this, an amalgam of o japanese semiconduct that gave up. japan companies tend to have given up except for the autos. dan lowe reacting to george clooney's letter. was that something? clooney is so powerful here. >> clooney's always powerful. >> always powerful. but i don't want to overemphasize japan because you
miss that china had good numbers last week and the european numbers are so high. europe, the financials. making a major come back, i like bbva, spain doing better, italy doing better, uk. >> i think we get european gdp on wednesday. there's an expectation that we'll show, as somebody who has been sitting next to me in the last year has been saying, they've exited in term of recession. >> you know that china dumps 25% of its product goes to europe. people forget there's 660 million people in europe. that doesn't matter. they do have a little stagnation but they're pretty money just like us. as soon as we take our eye off europe, we'll take our eye off of china. these are very symbiotic. janson an experiment. kind of like chemistry. i didn't like chemistry. then when i got a bad grade, i couldn't get into a good college. >> let's talk about the markets overall. we did mention we are coming out of a -- well, it was a six-week
winning streak and a one-week losing streak. s&p down 1% last week. volume extraordinarily low. >> oh, my, can you believe it? >> no. >> it was like a week between the last week of the summer just was really terrible. the drug stocks have stopped going higher. the bank stocks have stopped going higher. the industrials continue to power higher. including industrials that don't even have good numbers and that is because there's an expectation of returns to europe, not because of japan. >> what does that mean for this week as we try to think about it? >> i think that we're in a vacuum. some retailers will report. a lot of people feel that retail is kind of done because it's related to housing. we got affordability numbers out of the fed for housing, they were shockingly bad. >> what were these protestations to the contraire free the people who run those companies? saying that affordability is -- we're still way in the zone of
affordability. >> if we are, we must have been way, way, in the zone of affordability. the housing companies and the new housing stock just not selling as well as people thought because people don't understand. if you're in the mortgage game, looking for a mortgage, you do have sticker shock, whether you like it or not. and i think that that was just something that the housing stocks got right even as the housing executives got wrong. >> did want to mention we do have a deal here, a new deal, if you will, for david murdoch on dole. of course, he's the man who controls dole, but he did offer -- it was i think 12 bucks a share originally. he's now gone to 13.50 and gotten a signed agreement. >> is icahn happy with that? if he's happy with that, it's a deal. if he wakes up this morning, and he's angry. maybe he had a little del monte fruit cocktail? remember we would eat that because we had no money? >> remember how much sugar was in that? >> that's what you have.
the peaches. >> carl is not involved in this, from what i understand. you have a controlling shareholder that wants to buy this company, has done this before and taken this saigon of a rolling public private sister kind of thing with mr. murdoch. we do have 15.50 a share and cash. >> forget it jenkins in hawaii. >> you're so quick. >> you haven't seen me resting since i don't know, '94. >> there was a brief period where you were. that's 19 years. let's talk about blackberry again this morning announcing a strategic alternative. it could include joint venture, strategic partnerships or, oh, yeah, by the way, sale of the entire company. if you think we've been down this road before, you're mott m -- not mistaken, but that seemed to be a half hearted
attempt when the company in 2012 said they were vaguely going after strategic alternatives. are they giving up on the blackberry tech? >> talk to the palm. i just feel like the subscriber losses here are quite incredible that the hail mary blackberry 10 clearly not a doug flutie pass. $6 and cash, though. obviously a keyboard that people like. maybe you get a bit of a flat takeover. maybe someone pays 8, 9. maybe microsoft says we can merge this with the nokio platform, put together a whoet pastiche that no one wants. windows 8, no one wanted it. put this together. a big pile of what no one wants. again, listen, you think samsung -- people don't even like samsung any more. what is to like about blackberry? >> intellectual property and cash.
>> patents like kodak patents turn out tot be worth something. >> motorola, google paid a large chunk of change for what was largely intellectual property. they kind of introduced quietly the new phone. >> i'm being facetious about microsoft failing in the market. microsoft does have nokio. people used to love the keyboard. >> people still love the keyboard. >> i know. >> have you tried to type on an iphone? it's like a haiku because it can't do anything less than -- >> i know. every time i type out life, it comes out lithe. >> and the auto correct. >> it's awful. >> for those up in years, if you don't mind me saying, blackberry is good. >> i still like that. >> maybe someone will want that patent. >> people who use them now are investment bankers. they're still clinging to those blackberries. >> when you see an old tv program or netflix, people say, silence your blackberries. kind of like stop it with the
scm, stop it with the scm corona, no more electric type writer? remember that big stepup from the manual? >> i do indeed. then the back space with the whiteout. >> who invented whiteout? the monkees. >> oh, yes, thank you. by the way, our control room, if i make an error of fact about business news, but on this, oh, my god. michael naismith's mother or did you say his father? blackberry is up 9% this morning. looked like it will open around $10.45. >> that's only 6%, 8%. >> right off of whatever the close was -- friday. and there was a lot of talk last week. >> you know, that may be. >> they might be revisiting this. >> it wasn't for sale the whole time? >> i had spoken to some bankers who were trying to make people believe it was for sale, but i don't think management tore
board ever really went committed down that road. >> how nice a guy is that guy who runs blackberry? that's often forget number the equation. nice fella. he's a nice fella. >> is he nice? >> what's the matter with that? >> nothing. >> nothing at all, right? >> let's talk about something that's not particularly nice -- >> no. i'm just saying versus the jcpenney. that's not nice. that's not a nice situation. >> i'm glad you mention it because the drama there is building. i have to admit i was actually reading a lot last week on vacation. nice catching up. and i was following this closely. >> i was getting howard -- >> on friday when capital came outline. >> how about howard schultz sending everyone an e-mail saying this is a despicable contest. >> howard schultz in support of -- but let's set the stage for you, by the way, the drama going on is inside the boardroom. "the wall street journal" this morning weighing in saying the
retailers board met yesterday late afternoon to discuss the next move. directors said to be looking at ways to -- now this is their reporting -- remove ackman from the board. he owns 17% of the company and largest shareholder. publicly released a letter urging the company to quickly replace mike ullman. also saying they would like to see a change if questrom and mr. hicks were available to move quickly to do that. i find this fascinating in a lot of ways. but don't want to forget the underlying story, jcpenney, is it beyond saving? >> the declining sales are extraordinary. 29 minus 30, you can't recover from that. i think these guys know it. ford auto knew it. >> they still have a lot of stock, which they're not happy about. >> they can't be. so everybody questrom was he taking the job through cnbc.
allen, call me, ways on vacation. give me a call. maybe you want -- what kind of executive chairman. just give me a buzz. i'm right here. this is incredible how this is playing out on tv. do you really want to take the ceo job knowing that ackman hates the rest of the board? it's a situation. where is that french fella, that guy, that french fella that ran hewlett-packard. >> hewlett-packard? he wasn't french. >> what was he? >> he was german. >> his name is long since forgotten. >> yes, it is. >> they have mike naismith in my ear. >> that's funny. thank you. botaker. >> i look at this situation. howard schultz, one of the greatest ceos of our time. he can't create zbroobs enough to make up for the losses at penn es. >> it's not a financial company but nonetheless the loss of confidence at jcpenney and their vendors and suppliers and those
who finance them, it's a sign of impending doom. >> oh, yes. >> so don't you need to move quickly conceivably if that is beginning to happen? if there's a management team that's out there? we can discuss ackman's behavior and bizarre antics starting with herbalife not to mention the hair products that didn't delineate anything about what he wanted to do. this man is actually responsible for the problems at the company. >> this is incredible. how about an apology? >> how about selling your stock and moving on. >> do you know what gecko looks like, he looks like ghandi versus ackman. this is ghandi two, bigger than ever! >> let me come back to original question, which is should you not potentially push as a significant holder of this company a change in management? >> bankers liked him. >> what does that have to do
with anything? >> you want to get paid. i guess that whole disgrace thing bothers me i don't want to be myself, kinder and gentler than i am, but ambassador of goodwill jefferson here. but it does seem that ackman has come ported himself in -- he has no dog in the hunt. there's 100,000 jobs on the line. holy cow, what does jcpenney do with 100,000 jobs. if you work for them, wow, you know, gimbal'sgimbal's, lindt b >> you are responsible for putting in a management team that sent this company down the road. granted it was not great growth in penney's future but you could argue it was going to survive. >> they had a balance sheet. >> and you are willing to come out, scream and yell, putting out letters in public. which you have to, there's no mechanism for replacing the ceo. they have a process in place,
they're taking their time about it. >> proctor aer & gamble, hey, i trying to be fair and balanced. >> stay with it. >> can i say one other thing? >> yes, please. >> kaunt remove anyone from a board. >> no. you can tell them to go sit in the corner, but that's about it. >> you can do. >> put a dunce cap. >> you can put them in a dome. >> cone of silence. >> you don't go beyond the dome. >> no. you don't go beyond the dome. you can use the maxwell smart thing and then sit outside the cone of silence. >> i always liked agent 99. >> we could soon see the unveiling of a new iphone. reports say it could be about a month away. we could explore what this means for apple and, of course, the stock. take a look at futures as we start out on this summer, august monday. last week of declines. >> we've come to play. >> we have come to play. >> yes. [ male announcer ] come to the golden opportunity sales event
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sensor. that would be nice. we've talked about the need for real, new. >> omg. the stock got too cheap and you saw a lot of analysts cut the price target to a level a was then under where the stock went. the stock it's a financial juggernaut. i don't -- i want new products, absolutely. it's interesting, they're annualizing some very hot products. we tend to give this new administration no credit whatsoever. that's probably wrong. i want to wait and see. i want to pass judgment that this is already just a nothing phone because that's kind of the rap on apple. i'm kind of tired of that negative rap. >> nice to keep refreshing but not as though we don't really know what this will do. >> do we have a device that is a fast-speed train that -- do we have a transporter? do we have something that could beam me up? you know. no. i see nothing that can beam me up. that's what i want. i want something that's a transponder.
takes me to eliysium. >> i love matt damon. >> it's a damon vehicle. >> he's never bad. >> no. >> like hackman, never bad. >> that's why i went. i just felt i don't miss any damon movies including bourne. >> what did it do, 37 million at the box office. >> it was disappointing. elysian. one guy to get up there, jodi foster, minor role. not worth talking about. it's all sports right now. all sports. even preseason i found more interesting than movies. >> i'm watching the resurgence of the new york mets. >> an awesome tease. i did get to philadelphia eagles training camp, spent time talking to the coach. >> no longer andy reid. who is the coach? >> chip! chip kelly. >> we're going to go from sports
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[ static warbles ] ♪ i like the way you move ♪ i like the way you move ♪ i love the way you move ♪ i love the way >> we've got 5 1/2 minutes before that opening bell on this monday. time for the mad dash. what do you want to talk here? >> i find it amazing that t-mobile with new leadership has really been on the ascent and it's worth it. i mean -- you know, ipoed,
they're taking share. they have new equipment, they have the right plans. at&t has been lagging as stock because there's really four of a kind now. we have sprint, too? >> which is a really interesting point because there's still a thought that there will be one more key consolidation. whether it's these guys with sprint. we know they wanted to do this deal. could they still do it? or are the regulators going to say they're working that just fine. you don't need them all three to be capitalized. it may just work in a sense. >> that's a really good point because four has been great for the consumer. the rejection of the at&t bid by the government turned out to make the public happy. there's ab lot of consolidation. a resurgence bay company we all thought left for dead. >> absolutely, i agree with that. we'll keep an eye on charlie
ergen and dish when it comes to this as well because there's the possibility he can try to do something. >> lines up bankers, then goes on vacation? he's out there. >> one thing he did was increase the value of spectrum overall by all those machinations. that helped him. >> but i haven't thought about this company in years. when you watch at&t signups which were good, but you know what, these guys have a new plan. turns out the public is receptive to a new plan. this stock could go even higher. >> we'll keep an eye on a lot of other stocks this morning. he won a championship ring with the new york yankees back in '09. now the team's first baseman mark teixeira getting ready to ring the opening bell. he's about to visit us. d.
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♪ [ indistinct shouting ] [ male announcer ] time and sales data. split-second stats. [ indistinct shouting ] ♪ it's so close to the options floor... [ indistinct shouting, bell dinging ] ...you'll bust your brain box. ♪ all on thinkorswim from td ameritrade. ♪ opening bell is sponsored by td ameritrade. you're watching cnbc's "squawk on the street" live from the financial capital of the world. where you can hear the applause beginning because the opening bell is set to ring momentarily. we've got mark teixeira up there
about to do the honors for us. not quite sure why. i'm a mets fan, but he's a well respected player. >> spent some time on the dl. look, some excitement down here. >> by the way, we talked about it earlier. the volume lowest level since '06. '06! >> that's why you bring a baseball player from the dl on. jazz things up. we have a couple preseason football players, too. why don't we just turn it into espn. they've got a fight with fox. let's bring one on and bring on players. >> they know what they're doing over there at espn. there's a look at mark teixeira. we'll talk with him in a moment. the makers of pest management and plant healthy products did the opening bell honors. >> holy cow. >> after last week, too. you say japan doesn't matter. so why are they selling today?
>> matters till 11:30, then people say, japan? i don't know. geez, what's on tonight? right? so what's on tonight? >> nothing. absolutely nothing. >> i know. >> it's august 12th. >> look, i think that this is a market that is trying to figure out what the new leadership should be. you just don't -- you had the banks doing great. then you had the techs doing great. now you're kind of like stuck. no one knows what to do. and we don't have enough data points of individual companies. i mean -- >> how long do we sort of churn looking for potentially a new leadership group? if there is one? >> we have cisco reporting tonight. finisar reported, an amazing quarter. the telco companies are spending. i want to keep the market in front of people because frankly, this is what's needed after a remarkable run. when you get this kind of
churning action, it doesn't say that the moves will be repelled. they're just looking for a new leader. >> as for movers this morning, come back to dole because it is going to be one of the bigger gainers, at least at the early session here. 13.45 i'm looking at. if you recall, david murdoch controls the company, had been $12 a share to take it private, but they have now reached a definitive deal which he's raised that by 1.50 a share. >> is that best and final? >> i would think it probably is, yes. we'll see. you know, always fraught with difficulty when you have a control shareholder. >> right. >> different in fact here than with michael dell who is a large shareholder and founder but 16% give been everything they had to go through was not controlling. >> i always liked murdock's attitude. he says he wants to live to 125.
he may take this private, take it public and bring it private again. he's got a lot of time now. >> maybe kirk kerkorian can help him now. >> sunrise senior living strikes back. >> he's got to be close to 100 years old. take a look at tesla. we did have an investment by lazard. we await the latest announcement having nothing to do with the industry. >> the bullet train. i'm not going against musk. he's the most heavily doubted businessman since bezos. i just won't doubt this guy. >> we haven't talked about -- out in "the washington post." >> one of the most amazing stories in the world. articles about how they miss politico. "newsweek" going down. print is just a disaster. and "the washington post," the graham family, what are they now? >> they're kaplan. >> i just find that -- i think
it was kind of sad. >> it was. although you can make an argument that it isn't much sounder at this point. mr. bezos getting his $25 billion personal net worth is in a better position to allow this company to do what it potentially needs to do. >> right, these are vanity acquisitions. "the washington post" becomes like a university. and jeff gave a lot of money to the university. kind of endowing "the washington post." >> does it make you in any way, shape or form think about amazon in a different way? people talk about money managers who buy sports teams, should we be thinking about founder ceos who buy newspapers? >> interesting point. i have a company ecom on tonight. what you have is that guy is really doing amazing things underneath an amazon. the amazon web services is an unbelievable business. this channel adviser has to be able to work with amazon because of the third party business --
look, i think that these guys, they're different kinds of entrepreneurs. musk is a guy who is basically saying, listen, i'm going to make a lot of money with tesla, a lot of cars, a lot of money. the solar's been fantastic, fantastic business for him. why is he doubted so much? why is solar city doubted? why is tesla? because of the valuation? we saw amazon's valuation be laughed at for many years. i heard -- >> you still have to believe. pu still have to believe. when it comes to amazon they've showed that when they want to they can turn the switch. >> they are developing a lot of businesses within a business. and i think that's important. they're not static. and musk is not -- musk has a lot of energy. these rather new entrepreneurs just don't sit there and think, you know what? this is all i need to do. they're very much like edison. remember those guys did a lot of stuff. edison invented a lot of stuff. >> so did tesla, by the way.
>> absolutely. i think that tesla, having driven one, is a remarkable vehicle. and i looked at the bmw and the bmw over at cnbc's world headquarters and bmw is like, eh. tesla is give me some more. that dashboard that thing that semi makes for them. you don't want to be doing too much work when you're driving. >> no, you don't. the story in "the new york times" that you conceivably hackers could start to hack into automobiles as they become more and more wired into the internet. can you imagine? and you lose all controls of your automobile. >> is there anything left? have they no shame? >> no, they have no shame. no, they have no shame. let's talk a bit more about jcpenney. remember a few weeks ago i had a story, a tiny little blush about dan lobe's bloomberg page.
and he was talking about bill ackman. i thing the term "enema" was used. >> i couldn't google that enema. >> the newest bloomberg screen shot that he's got or page says never interfere with an enemy when he's in the process of destroying himself. that is a quote from napoleon, i believe. >> wow. about. >> and one would imagine that also -- >> going to moscow here? >> refers to mr. ackman. >> again, you know, i was at penne. i bought a pair of slacks, i bought a hat. i was the only person down there. a lot of sales people. there are lives being caught up in this titanic struggle. you know, not unlike what happened to telldart. i like michael douglas to play -- >> she learned her lesson there. >> i just think that ackman, as you said, ron johnson was his
choice. >> it was. but his funds which are the largest shareholder in this company and then throw vornado in there as well. >> sharknado. listen, as far as i'm concerned the most important thing in the world, david, is making the quarter. life, liberty and making a quarter. isn't that what they said? >> yes. >> pursuit of the quarter. this is about making the quarter. it's about making the quarter. that's the sanctity of a hedge fund manager. the quarter. you worry about bigger thing, right? with malice toward none but a good quarter toward all! >> i suppose. >> get with the program! >> i do wonder some of the decisionmaking is fascinating. >> and that's the end of the quarter? >> jcpenney was going to be a ten-bagger. air products is an interesting one. we shall see what happens here. >> give you a sign, canadian pacific, procter & gamble. the general growth.
these are huge wins. so come on. >> right. only one of those -- canadian pacific wasn't an -- let's get to the floor and see what's moving this morning. >> good morning, everybody. happy monday. a great article on the front page of the journal. emerging world loses growth lead arguing that developed countries have stronger growth momentum than emerging markets. there's certainly some truth to that. focus has been on the united states. but you wouldn't know it by looking at the markets. the emerging markets have made somewhat of a comeback. china up 6%, brazil up 6%. the s&p is lagging behind that. germany is doing okay. we've noted how europe has been somewhat stronger but still lagging. japan is just down. it's happening again today. the nikkei is down 0.6%, a six-week low. good gdp but not as strong as anticipated. the shanghai composite is a two-month high, up 2.4%. recoveries in material stocks last week. we've seen recoveries in
commodity stocks. the china data, the import/export data, industrial production data, stronger than expected. i'm not saying the story in the journal is wrong, but it was oversold and they're starting to catch up. isi, very respected firm this morning turned the bullish on china equities short term. they argued there is no economic hard landing that's emerging in china. that's the primary reason. by the way, the p/es in china to the extent you want to believe them are only at 11. the historic average has been 27 on the p/es. another reason that isi was bullish on that. turn back to the united states. people talk about an unlogged rally this is. an inflow in stocks, another positive inflow in the stock market. interesting article this week, $92 billion has been put into the stock market this year. is that a lot? 180 billion taken out for the same period last year. so 92 billion in versus 180 billion going out last year.
well, it may not be the great rotation, but obviously somebody is is not standing on the sideline nis more. somebody is putting moab back into the stock market. finally you were talking about home building stocks and the problem with higher rates. we have a double whammy for home building stocks. last week president obama came out gave a speech on fannie and freddie arguing they ought to be wound down and replaced by another agency. you saw what happened on that, david, home building stocks went through the floor last week tuesday and wednesday. so now we have a double whammy, the concern about higher rates and concerns about less government support overall. that's a real problem. and the itb, the main etf for the home building industry hit a new low for the year, but it wasn't on the rates, it was on concern about fannie and freddie and the lack of support there for the mortgage market. guys, back to you. >> thanks very much, bob. that's still to come. fannie and freddie. that will be a long -- >> begin today just a football security. don't know what's going to
happen. >> even the preferreds are a real risk. time for a little bit of a faber report following up on a story here. our viewers have been covering mergers and acquisitions for a long time. but rare indeed when you see a consent solicitation of the shareholders for a public company vote with their written consent to get rid of a board of directors. but that does appear to be what is going to happen in the case of management associates. even with a definitive agreement having been signed with community health, sources close to the situation indicate to me that as soon as today a written consent led by glenview capital management t largest shareholder at roughly 15% of hma, will be successful in putting those -- are those the new or the old? getting those guys out and putting in a new group, yes. that is correct. of directors at hma. we just don't see this for 3 1/2
billion dollar companies. it happens very, very rarely. but in fact in this case, after, by the way, the proxy advisory firm both came out firmly in support of the board of directors proposed, the nominees proposed by glenview. it does indicate that tithe will happen imminently, as soon as today or certainly as soon as tomorrow. you have those consents delivered, then you have this bizarre transition where one board leaves and another board including the chairman comes in. i thought it was worth noting that that does appear, according to source, appear to be very likely to happen in the near term. 51% of shareholders having voted such. >> let's analogize jcpenney. glenview, is as my friend sharon skolnik says, do kg a great thing. trying to get rid of the board, put in a whole new board, why does ackman not do that?
>> ackman already ran his campaign, got his seats and was able to -- >> right. but glenview was someone you welcome if you're a shareholder at this company. >> by the way, successful in the active sense of replacing a board, but we'll still see in toefrms creating shareholder value. it was a take on with community health. that will take place months from now. you do need 70% of shareholders to approve it. glenview has yet tot s say anytg about that. they'll weigh their options. >> but you know glenview. this is a very high end activist. all activists are not created equal. >> they've never even been active before and not clear they will be again, but in this case certainly very interesting. let's bring in kelly evans. >> welcome back. >> great to see you. >> get your input on this one as well. yesterday reuters came out with a nice piece pointing out
financials are poised to regain the top spot in the s&p 500. tech has been the biggest sector since the financial crisis, of course, but its lead is narrowing. in terms of percent of the market, it was 3.5 percentage points bigger than financials at the beginning of the year. financials haven't been on top since may 2008. they've had quite a run this year. they're up something like, you know, 20, 30%, even more over the past 52 weeks. now they're back at 16.6% of this market. so that's again up from about 9% back at the crisis low. so interesting couple of questions this brings you. the first is remember when the markets started to collapse and everyone said the financials were way too big a share of the market. we're already close to being back. we're not all the way there. but the question is is this refinanciallization, if i can borrow a term from barry here, a good sign, a good thing or not. >> well, are we almost really
back in terms of profits? >> financial share of the s&p 500. >> because it was a measure of profits back then. profits from market cap we're talking about now? >> we're talking market cap right now. what's interesting is quickly profits are starting to do the same thing. you can say this is calling a top, financials were the worst performing financial sector. do we want to view this as a sign of the economy getting back on its feet or something we should be cautionary about and say we're back to the bad old days before this all started to fall about? >> i don't know. we're still on a u-curve where we're almost there where things are really terrific. tech has also been terrible. the real tech is gone away. amazon, i don't think that bezos is going to be a bad guy at post. tesla, is tesla not a great tech stock named after the man who really did the electric pioneering more than edison? i'm just saying that tech itself seems to be -- >> you're saying tech is
self-destructing more than finances? >> intel's such a bad actor. >> ibm? >> ibm seems to be falling apart. >> to the larger question, which has been raised given in '07 the profitability of the financial sector was equal to so many different sectors of the economy, it doesn't necessarily point to great productivity/entrepreneurship/ new products. >> it didn't work out well there. >> what if the fed steps away? plus there's ab great concentration of banks, if you like that or not. i know jefferson wouldn't have, but he's not here. >> the concentration is still quite severe if they start handing cash back to shareholders, good for the shareholder, but is this a good thing for the rest of us? >> at least it's worth more than a nod. you write a jefferson book. you're all over it. >> that guy is smart. >> yankees first baseman will visit us.
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fresh from ringing the open bell, let's welcome the new york yankees first baseman, mark teixeira, number 25. a two-time all-star, five-time gold glove winner. world series champion. unfortunately, on the disabled list. it's been a tough year for you? >> it has been. 2013 hasn't been kind. the first time i've had a major injury in my career. i've played a long time without getting injured. unfortunately it was this season it happened. >> you've been smart, though, mark, i've met a number of business executives who know you, have relationships with you. you seem already -- not that you're retiring any time soon but injuries like this can make you think about how quickly it building pass in the terms of an athlete's career. what are your thoughts on your life after the business of baseball. >> important for players to take responsibility of their careers. we sign a contract at 18 or 21, we let our agents run everything, letter people tell us what to do.
i've taken it upon myself to follow smart people. i'm in new york, the center of the business world. why not meet some guys, follow some guys in what they're doing. >> give aus a sense of who you are talking about. in the venture capital world or wheel and deal world? >> in the venture capital word, a friend of ours, kenny dikter put me in to a couple deals that are fun, too. i want to have fun, too. david blitzer's a good friend of mine. >> these are total hitters, by the way. >> he owns a sports team. >> he owns the sixers. david and i love talking sports and getting together. gary kohn has been a big supporter of our charity. he's a great guy that just -- i'm not even close to his realm understanding the markets and understanding trading, but those guys, i try to surround myself with smart people. those guys are some of the smartest. >> this is a breath of fresh air. i was in eagles training camp a week ago. i'm always so worried because when the players are done, espn
did a sad piece about what happens. i mean, you can be -- you got to get other players involved. because you can really be a force of good here. >> yeah, i think like i said, it's important for guys to take responsibility. we have a golden opportunity as athletes, as celebrities to meet people. we're relevant right now. once we're explayers, i don't care how good you are, unless you're derek jeter or michael jordan, you're not as relevant right now. you have to get yourself interested in business and doing something positive while you're playing so you can kind of cash in it. >> you mentioned responsibility and personal responsibility. i'd be remiss if we didn't ask you what so many yankees fans are talking about, which is a-rod, p.e.d.s, what is the sense on the team at this point in terms of his willingness to take personal responsibility? >> there's still a lot of confusion of what's going on, but it's really an unfortunate situation for all of us. it's very hard for me to be
objective. alex is a teammate, a friend of mine. i played with alex for six years. tough for me to be objective, but at the same time, you can't cheat. that's pretty simple. >> still close to the red sox here, not that far. plenty of time. >> plenty of time. i think we're seven back of the wild card. one game a week. let's gain one game a week in the wild card and we'll be there. >> when does that come off your wrist? >> this comes off next week. i can't wait. >> mark teixeira. >> we need more guys like him. a-a-a. f-f-f-f-f-f-f. lac-lac-lac.
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ap let start off with juniper. >> it is part of the group making a comeback here. >> you think juniper you think road com. >> this is a pilon. goldman downgrades. it's a good company. >> tiffany. >> this stock has had a remarkable run. i don't know if you realize, not a lot of up side perhaps. >> foot locker. >> i mention this because it's just a foregone conclusion that
hicks going to leave foot locker and go to jcpenney? give me a break. why don't we talk to him first before we say he's taken the job. >> good point. ralph lauren. >> they did not report a good quarter over the weekend or last week, i prefer pvh. >> lowe's. >> too much love for lowe's. i like home depot more. >> they go to a sell. >> no, a hold. >> they went up, not down. apologize. >> a lot of tech companies that have gone public that are doing great thins with mobile. china harnessed the advertising world for mobile. and econchannel adviser is one. i said please come on monday. they look extraordinarily strong. then tupperware this is the nonherbalife. tupperware that's a great company with real numbers. but tupperware is the way to do direct selling. >> the model, right? >> a great company.
>> everybody else start chart week which is kind of like shark week. >> shark week only with charts. >> are they just selling what used to be on tuesday now on monday? i'm tire tofd shark week. >> no. >> by the way, i'm tired of alaska, too. i know more about alaska than anybody on earth. >> there's great whites out in montauk. way out there, stay away. hate that we're back from vacation. >> good to see you, too. >> right to the break and we'll be back after this. in a world that's changing faster than ever, we believe outshining the competition tomorrow requires challenging your business inside and out today. at cognizant, we help forward-looking companies run better and run different - to give your customers every reason to keep looking for you.
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♪ this girl is on fire ♪ this girl is on fire ♪ she's walking on fire >> yes, blackberry spokeswoman alicia keys may be on fire, but what about the company itself? well maybe not. the struggling tech giant announcing it may try to sell itself in order to save the business. but will it work? >> still no signs of resolution in the cbs/time warner battle. a shareholder of both will weigh in on what this fight now means for investors. >> plus rockwell collins making a $1.3 billion acquisition that
pushes it farther away from government work. the ceo will join us live and what the deal means for him. >> also ahead in this hour, a hedge fund manager that only invests in retail. what he thinks of the drama at jcpenney. >> we're starting off this hour with blackberry. the company announcing it's searching strategic alternatives including a sale. john has more as the shares are popping. >> yeah, kelly. and alicia keys a lot more than just a spokeswoman for this company. they've hired her as a marketing executive. yet another challenge he's got on her hands, but look blackberry in a difficult place, but it's interesting. they're trying to make the case, ceo tohorsten heins, $3 billion in cash on hand. but their market share has been in steep decline for a while
that's face tough competition from the iphone and android. the latest blackberry handsets have been unable to gain a lot of traction. 2 million shipments reported in the last quarter. also-rans are not created equal. you consider nokia's lumina an also ran at this point. but their last shipment that they reported 7.4 million. so they're nearly three times what blackberry is doing. that and you consider that we've got recent reports saying that apple is going to have their new iphone announcement coming around september 10th set s up difficult end of the year scenar scenario. now they're getting ready for a q-4 crunch with products that haven't taken off in the marketplace. perhaps some kind of a buyout. but hard to see who will see value in these assets.
microsoft already pursuing a windows strategy. samsung down the line. a lot of people like to bring up lenovo, but no real indication of their interest here. >> they've got the calendar bearing down on them. thanks for that john out in california for us this morning. for more on black berry let's bring in guys good morning. jay, let me pick up on the point that john just made. what is the value in this asset? shares are moving 5.8% on this news. >> there's chatter so investors are getting excited. you think about the company, there's no indication they'll sell more phones, no indication that consumers are interested, even enterprise has moved on to the iphone and to a certain extent android. >> in that case, brian, what value is it then that investors are seeing here? is this ultimately about selling more hand sets or splitting up the company, being bought by somebody, the patents, the
technology they might have? >> well, i think you have about $6 in cash. so we value the stock at about $9 as well. the rest of it is patents, assets and the service revenue on the blackberry 7 which is going into decline but that's a bit of a cash cow. going forward, i think it's a 50-50 split, you bet that blackberry will take off or make a revival and management will have more time to make that turnaround. tore other hand that they just continue to burn cash. i think you have kind of a 50-50 split. either the business takes off or it doesn't. that's the bet that any investors would be making right now. >> do you think they would take it private? do you think it's likely that private equity would be interested? a lot of people suggesting that probably isn't the case. in which case, as thorsten heins and the rest, what would they do, with the e-mail system, the network centers and the security
there. what are the possibilities? >> sure, well i think private ek with it se probably the best chance. if you're talking about an acquisition from another party, lenovo was rumored in the past, there are regulatory concerns. the prime minister of canada sees blackberry as a source of national pride. an acquisition from another company is tough. that's what getting investors excited that private equity might be a bailout. strategically there aren't many options where they could go hardware if black berry 10 fails. there is value in the company, but we don't see much more value with the stock at 10.50 or so. >> they have a lot of cash, but taking this thing private makes the dell transaction look like a no-risk deal. i mean, really? >> yeah, well, i think that's the other side of it, right? so there is that floor in terms of cash and patents, you know,
for any investor that think z there is up side, it is an attractive opportunity. we're a bit skeptical that there is any up side. the market's priced as if there's no chance they'll come back. with the black berry 10 selling only 2 million units on a launch quarter that's pretty weak. there's skepticism they can turn it around. >> this has a market capital of 5, $6 billion. it isn't that great as things stand, debt nowithstanding. would you echo what brian just said that the chinese would not be able to get their hands on what is still a very good brand name certainly in western europe and in north america? >> i think with blackberry, if you want to take it private, it would take someone with vision. the current management team doesn't have the vision. they just sort of are behind and they're sort of playing a game from three or four years ago. they came out with this os, that would have been nice four or five years ago. there's no applications, nothing to differentiate it from an
iphone or make it better than android. so maybe the slim chance would be someone comes in, seeing something in the assets, sees some kind of vision for let's just give up on the handset business, basically. we'll invest a little bit to keep things going, but maybe some sort of security play, other idea for what you can do with what they have with mobile technology and shift away from trying to be a handset company and shift away from trying to fight the iphone because that's a battle they cannot win. >> we'll leave it there. thank you both for your insights this morning. blackberry's exploration of strategic alternatives brings us -- yes, you guessed it -- to this morning's squawk on the tweet. a conversation we were just having. tweet us @squawkstreet and we'll air your responses this morning. the dow is coming back after being down 60 points. industrial names making big moves with many hitting new highs recently. let's have a look at the markets and where best to put your
money. president and cio with castle arc management. and chief investment strategist with wells capital. general men, good morning. this is potentially a very exciting time for investors moving forward because growth may be seen quite clearly to pick up over the next couple of months, and you have people like goldman saying that for the next three years we can get 3 to 3 1/2% growth in this economy. that said and with that nailed to the mast, jim, why do you think we would trade sideways to the end of the year, when 7700 on the s&p is all we're going to get? >> i subscribe to that long-term view. i think confidence has a long ways to go to the up side. that will continue to carry evaluations higher. i think we're in the process and have already started since may when we first got 1700, simon, of digesting a few things. we're digesting a 3-point
increase in the price earnings and stocks, that's a big jump in a short time period. we're divesting a complete pricing of the u.s. bond market, which i don't think's done yet. i think we're going to go to 3% before the end of the year, in part because we'll have better than expected growth. and we're going to digest the beginning of the end of tapering or fed qe and i think that's going to start into september. i think we'll get through all that and we'll ride right over the myth like we rode over the great fiscal cliff last year 2014 without fed support, and that might even lead to higher confidence that the economy's standing finally on its own two feet helping stocks. i think we're going to take a pause in the next few months. >> okay. that said, would you not agree that if we see a substantial improvement in growth -- and this is a really realistic possibility, a substantial improvement in growth, jim, the people are going to have to put themselves in difficult parts of
the market that a big rotation will go on within it. >> i think that's already happening to some extent, simon. you're sighing cyclicals leading this marketplace already. you mentioned the industrials, but you're also getting big movements in the retail or consumer discretionary. you will see maybe tech pick up, the financials are already doing well. to the extent that we get more of that, i think you're correct, but the market may continue to take a pause. >> jerry, i want to bring you in here. i know you're saying the cycle hasn't totally played out and industrials could have room to run. i want to go back to a conversation we were having last hour about the role of financials in this market in particular. as they claw back their way to perhaps what will be the biggest sector in the s&p 500, do you take that ultimately as a good sign or as something we should be worried about? >> oh, no, i think it's very important and almost essential for the financials to step up here. we've been four, five years now past the bottom of the economy, and yet the economic sectors within the market are just
finally beginning to reflect their normal cyclical behavior. late is better than never. financials generally lead the economy and lead stocks out of a cyclical recovery. and that's just getting started the here. it is a wonderful thing to finally see confidence return to the financial sector. and as that happens, you can see the breadth in the transition to the other places. as jim was mentioning, we have to move into these areas like industrials, like energy, like financials to see the overall market mature and move on to this next phase. but boy, there's a lot of room ahead of us as we go through this transition and move on to the next one. boy, there's plenty of places you can still see with up side. >> let me ask you specifically, then, jerry, whatted david costen is laying on the table. because the economy will grow and sales will grow, you want to be in areas of the market where fixed costs are fixed and become
a smaller proportion and therefore the margins grow disproportionately. he's suggesting, therefore, that you go where the incremental earnings will lead to a greater profit. >> he hit it on the head. at this point in the cycle earnings will be surprising because revenue growth will actually appear where estimates don't see it. and when you have a broad base in fixed costs, any incremental dollar of revenue gives you much higher contribution margin. the industrial names are the sweet spot for that. companies like wadtech, parker hannah finish, emerson electric, those all have nice fixed cost base. pu can see it in a variety of the energy companies that are stabilized and reflecting the growth that should come with $100 oil prices. overall any business that has u.s.-centric. we haven't seen the real contribution from housing and from auto acceleration, that's
still ahead of us. that's why i think there's earnings surprise coming in the market over the next one to two years in all of these areas. >> amen to that. guys, we have to leave it there due to time. have great weeks. thank you for kicking it off with us on cnbc. about nine days in the cbs/time warner battle and neither side is budging. with millions of you blacked out, will cbs ratings suffer? and hit them in the bottom line. rockwell collins moving away from government work and into commercial airline work with a $1.3 billion ak wiz is, the ceo will join us live. that's why hp built a new kind of server. one that's 80% smaller. uses 89% less energy. and costs 77% less.
it is day nine of the time warner cable/cbs blackout over fees. julia boorstin is live with the latest. what has gone on much longer than people were expecting. >> much longer, kelly. and despite the fact that this past weekend was a big sports weekend with nfl preseason games and the pga tournament on cbs, there is still no sign of a deal between cbs and time warner cable. now the two companies did go back to the negotiating table late last week, but there are still no updates from either company. the question now is what's the impact of the nine-day-long blackout? the cbs-owned tv stations in new york, los angeles and dallas' local news broadcasts have
suffered significant ratings declines. los angeles was hit the hardest with ratings in its 5:00 p.m. news cast down by one-third and at the 11:00 p.m. newscast its ratings were down 25%. this hurts local marketers looking to get back-to-school and auto ads in front of shoppers. but cbs says the blackout is not having any significant impact on its national ratings. shows to hit, under the dome and big brother. and the ratings for the pga championship on saturday moves 30% from last year. we'll be watching the blackout's impact. one thing it hasn't hit was david letterman. he was off again last week and off again this week. let's get a big media shareholders take on what is a nine-day dispute. lair havarty is the manager of gabelli funds.
it has shifares of cbs and time warner cable. good morning. >> hi, simon. >> it is a good morning four? >> oh, i think it's a very good morning. we own these businesses, simon, at the end of the day they're very good businesses. you go back a few years and from the bottom of the market cbs is -- >> we seem to have just lost our satellite connection there with larry. >> well, can i just ask real quick, david. >> sure. >> is this the entire cable industry shooting itself in the foot? because if i'm an advertiser, why don't you look at this and say these feel like they're more common. i'll go safer, online, for example, make sure i get in front of the consumer. and we know these mobile companies are beginning to make mobile advertising work. >> the big question is as you move to digital in so many different ways will the ad buying move there in the same
proportion? >> right. >> we haven't seen them willing, still digital dimes versus analog dollar. but these disputes are becoming more and more common. perhaps this one has more focus on it because it's los angeles. >> big media market. >> the question for many, it's moonves and what he was saying there is what a great job moonves has done at cbs. the question is whether or not he's overplayed his hand and being too aggressive. >> does it drive people to a directv? to a satellite provider? >> they always hope that will be the case. i want out of my time warner cable. though these are usually all ollie goppalies. perhaps most often here the most interesting part is the fight over digital rights. i think we have larry back. on this particular fight talking
at the desk while we're getting your signal back. the digital right seems to be a key area of dispute. how do you think that will play out? >> well, i think moonves, if you look at the stock, david, he's just played the hand brilliantly. he understands how to maximize the value of his content on multiple platforms. he's been way ahead of the rest of the industry in negotiating these deals and he's got a great hand because he has great content. at the end of the day, david, he's going to get paid for it. and i think time warner cable, on the other hand, if you're their management, you're looking at your worst nightmare. here's john malone who probably has made more money for shareholders than moonves, declaring that the cable industry's got to be consolidated. and here is time warner cable sitting there with a lower multiple than charter and if you listened on the charter
conference call, you find that charter doesn't have a problem with these escalating content costs. they have a higher multiple than time warner cable. if time warner cable hurts itself and starts losing subs, dr. malone is going to pounce on them one way or the other. and the math works. >> do you think the math works? as a time warner cable shareholder you'd want to use your balance sheet to level for the benefit of shareholders? that's what they're saying the reason we the wouldn't do that. >> the choice is you lever up. they're planning 5 1/2% per debt. time warner has a multiple around 7 times. an 800-point spread on this, you can drive a 747 through that spread. i think dr. malone is going to be able to find banks that will extend credit to him at a very, very low cost of capital.
i was astounded last week a company we own media general renegotiated a credit line and they'll save $31 million on interest expense. that's $10 a share for media general. the leverage on doing these deals because the companies on the buying end like dr. malone, have credibility with lenders. the cash flows are going to be very, very good. the financial market conditions in this industry are just astounding. that's why, in fact, the stocks have been going up. the other thing that's going on, and cbs is benefiting from this as is time warner and viacom, is the tremendous growth in the value of serialized content. cbs is producing a new serial on showtime called ray dunevin. that will have enormous value just as the content produced by time warner and viacom has had tremendous value. so we see the content getting more valuable because it's being
sold in international markets. we see the value of first class content in the broadcast world, which moonves has getting more value and that's sports rights and things like csi. so you've just got all these factors going on. it's all being helped by the lower interest rate. >> well -- >> at the end of the day, the losers are the public. they'll pay more for this. hopefully congress doesn't get involved. >> well, we'll see if that's the next step here, larry, thanks again for your time this morning. moving on, elon musk has everyone talking and this time it's about the hyperloop. he's set to reveal his plans for the high speed transit concept some time later today. find out what those plans could entail. weekdays are for rising to the challenge.
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chicago with more. something sounds like out of a sci-fi book. >> it does. but the fact that elon musk has been so successful in other endeavors has people saying this must be more than just a theory. he basically says that when he unveils it this afternoon, what you're looking at is something that's a cross between the concorde a rail gun and an air hockey table. thing about something that's going to take advantage of mag-lev, jet propulsion, the hyperloop, he says will cut the transportation time from l.a. to san francisco down to just 30 minutes. solar powered, so less expensive than something that relies on conventional fuel and the tickets would be less than if you were to take the same trip on a plane or on a train. there's already one company that we found in longmont, colorado, just north of denver that's developi ining tube transport technology called et-3. it's brought in a number of investors.
here's what the founder told us when we talked to him yesterday about the potential for superfast tube transportation. >> new york to beijing, china, for instance, in about two hours. that's 8,000 mile ps at 4,000 miles an hour. or you can get from l.a. at that speed to new york in about 45 minutes. the likely speed for that route would probably be a little bit slower, maybe 2,000 miles an hour. that would get you there in about an hour and a half, then the international route would be at 4000. >> yes, he's talking about people going 2,000 miles per hour or 4,000 miles per hour over long distance. i want to show you that chart. because that blue line at the bottom there, that's the nasdaq 100, up 14% in the last year. but take a look at elon misk's other ventures, tesla and solar city. both up more than 374%. that's because of that success, kelly and simon, that success
has people saying, but wait a second, this may be just a theory, but elon musk has had ideas in the past that have really taken off. >> isn't he saying on the one hand he doesn't have time to build it himself? did i hear you say they'd be traveling at 1,000, 2,000 miles per hour. >> 4,000 miles per hour as well. that's the theory. >> human bodies can't withstand that, can they? in aircraft they have g-force. you can't go in your shorts and deal with that? >> i haven't done a lot of looking into what it would take for the human body to transport. what would have to be done to the compartment in terms of pressurization, but that's the theory behind superfast tube transportation that you can cut down these distances with extreme speeds of 1,000, 2,000, even 4,000 miles an hour. >> like firing somebody out of a cannon across the united states. >> that's another way of looking at it. >> phil lebeau this morning.
we'll have plenty more on that story later in the program. also straight ahead following a $1.3 billion acquisition, the ceo of rock well collins tell us us why the company is moving farther away from government work. with fidelity's guaranteed one-second trade execution, we route your order to up to 75 market centers to look for the best possible price -- maybe even better than you expected. it's all part of our goal to execute your trade in one second. i'm derrick chan of fidelity investments. our one-second trade execution is one more innovative reason serious investors are choosing fidelity. now get 200 free trades when you open an account. jackie: there are plenty of things i prefer to do on my own.
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that investigation. kate kelly has more on what will be a big story this week. >> we expect it to be. and the anticipation is on for the expected arrest of these two one-time jpmorgan employees, a senior manager and a more junior trader. those two worked in the company's london office, and they have been accused of mismarking jpmorgan positions in certain liquid credit instruments inned orrer to hide losses. the two men are reportedly in the prosecutorial cross hairs thanks to the man who actually garnered the name the london wail. that trader bruno iksil is expected to cooperate with the justice department and to make the case against his former colleagues. given that grout is now living in france and martino hasn't been seen in quite some time, where these arrests remain unclear. also the trader who actually ran
the jpmorgan office where those losses occurred. his friends believe he's relocated to his home country of greece. why he's not figured in these anticipated arrests, we don't entirely know. the case could be yet another big move for manhattan u.s. attorney preet bharara. he is thought to be working with london authorities to arrange the arrests. meantime, guys, "the new york times" is reporting that bharara is also probing jpmorgan to hold it accountable for the whale debacle and not just focusing on a handful of individuals. >> just curious, i struggle a little bit with this one to understand on what basis bharara is going after these employees for doing something criminal as opposed to a bad trade that they tried to get out of. i understand it has to do with the way they might have been misrepresenting the actual price of the trade or where they got
in or out. but people wondering what's the criminal activity here? >> sure, sure. remember, these are very illiquid corp at credit indices. they didn't trade on them on a basis. i'm sure there are days where there were no trades in them. maybe weeks. you're trying to do your best to position a market and give it the most proper current valuation even though you may not be buying it or selling it. so there is some educated guesswork involved there. however, there are recordings and other documents that suggest these guys were trying their best to, you know, make the marks look as attractive as possible in terms of minimizing losses. there were times in which the marks on these positions within the relevant office here actually diverged from the marks that the jpmorgan investment bank was making. now, with a criminal case, you're always going to look for motive and intent, was there an intention to defraud or mislead. that will bey the crux of it. but a suggestion, if you look at some of the reporting on this,
that there were bad intentions. >> but to be clear, this is music to the ears of senior management at jpmorgan. because if they can say look, possible criminal activity, what can we do as managers if you will have people behaving like that in the organization? >> absolutely. >> they looked for the e-mails and checked for the e-mails. that was the story at the beginning. >> but when i cite some of those examples i'm talking about the senate panel, the permanent subcommittee on investigations that did an exhaustive look at these facts and some of these reportings, so that's probably a more neutral source. but you're right, the strategy has been to say these were a few bad apples, we did the best we could. there were questions about what the cfo said what he imparted to the public and when. i don't know this for fact, but that could be an area of focus for prosecutors. >> keep track of it, we'll speak to you soon. rockwell collins is buying
eric a maker of commercial flight systems from the carlisle group for about $1.4 billion. rockwell shares down about 2% on the move. let's bring in kelly ortberg. he's the ceo as of july. joining us on the cnbc newsline with more. good morning. >> good morning. >> first of all, can you explain the basis behind this move and the extent to which you coming in as ceo has made de-emphasizing government work a part of that? >> well, this strategic move is really a no-brainer strategically for us. we're combining the capabilities of rockwell collins for on board aviation equipment with the ground-based networks that arinc has. that will allow us to provide broader end to end communications products to our commerce going forward. we've been working this deal for a long time, several months. the transition to leadership here was really just coincidence with the timing of this deal. but i will say i'm fully behind
the acquisition and have full support from our board. >>y have a lot of avionics content. these two major players in the market which a lot of people describe as having effectively a do youopoly, either way, whoever's ahead in the horse race at the time being sounds like it's good for your company. >> we supply to both airbus and boeing and are instrumental in equipping their next generation warps this information-enabled equipment. >> i'm curious as well if you can tell us a little bit about where you're taking the company. and is this all basically reflecting the evolution away from dc because you sense there's going to be less defense work in the years to come and perhaps more business on the private commercial side? >> well, we've always said we want to hold our business to be a balanced business between our government and commercial. and we like to see that somewhere around a 60/40 split
either way. and what we've seen is that with the government downturn, we're overweight in defense and we have focused on shifting to commercial, and this acquisition allows us to do that. >> just one final thing, kelly, before we let you go. is this about very clever aircraft navigation systems in the sokpit or about me using my broad band in the cabin? >> it's both. in both the flight deck and the cabin. and the major growth in digital information exchange is going to provide great growth for our company going forward. >> kelly, concerned your shares are down on the news? >> no, we're a long-term player here. i'm very confident that is going to be a long-term added value to rockwell collins. >> thank you for your time this morning. the ceo of rockwell colin just completing another acquisition. >> we hear from a hedge fund manager that only invests in retail. david berman will tell us why
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>> thank you. >> what caused a spike in ad revenue? >> newsfeed ads work. >> more bullish than most of the street. >> i think my rhetoric is polished. welcome back. it's a big month for retailers as the sector kicks off its earnings season and back-to-school sales under way. investors will watch closely to judge the state of consumer. joining me now is the hedge fund manager that's been focused on retail. you've been with us many years having this focus on certain parts of retail. let's start off with the consumer. is the consumer strong or weak and is retail, therefore, both the same? >> david, thanks for having me on. the consumer is not weak, i mean, not so weak. i think retail is weak. the first time i think i've ever said that. almost like a paradigm shift. what's he talking about? how can the consumer be okay but retail weak? >> okay. explain it to me. >> what we've seen is that the first quarter sales -- 200
retailers every quarter, total sales for the first quarter were up 2%, which were down from 4% a quarter before. a lot of people thought that was because of weather. they thought they'd bounce back this quarter. >> mall traffic i know was low. again, right, weather. >> but bounce back because the weather would kind of come back and you get 3%, 4%, but doesn't seem like that will happen. next few weeks we'll have retailers reporting. we think it will be a lot worse than people thing. before i forget, why is retail okay? people are spending money on other things, on cars. >> why is the consumer okay? >> why is the consumer okay. cars, travel, air, hotels, they're all doing great. you've seen the stocks. but they're also spending money -- and this is where we're running the numbers -- on samsung and apple and they're spending money on amazon. our calculation in this last quarter, q-1, we've only just
now reported q-2 -- >> right. >> almost 50% of total retail sales, of total growth and retail sales came from those three companies. that's mind boggling when you think about it. that doesn't include housing, cars, we don't see the retail as the consumer being weak. >> consumer is making certain decisions about what they want. >> that's right. >> how is that resulting in what we call then retail being weak. soft goods? >> traditional retail. >> all are not going to do well. >> that's right. >> i haven't heard you be this quite negative in quite some time. >> we've been optimistic recently. we thought things would bounce back, but they don't seem to have. >> what do you base that on as well? i know you always look at inventories versus sales and try to gauge where things may be going. this is a pretty significant thesis out there. >> first of all, retail inventory at the end of the
first quarter showed a dramatic trend drop related to sales growth. so we look at the sales growth and the growth rate and that trend got worse and worse over the last four quarters. so it kind of gave you a sense that the second quarter profits wouldn't be that good. however, because of the bad weather in the first quarter, we thought it might be sorted out. but what is that based on? not only the inventory, but the fact that we go to the mall a lot. the discounting ach heavier than it should be. you have key companies reporting earnings that are just blowing up. american eagle just blew up bad numbers, ooh. >> we don't get too many sales reports either. but the companies we do get, it seems to be okay. >> that's the real irony here. you usually have a hundred companies reporting monthly sales now ten or something like that. those that report monthly sales, costco, these are best of brand
companies. limited, the gap and the buckle. those are best in class. they do well. the ones that are doing well are reporting the information to us, giving sort of decent results. so the world's kind of thinking things aren't so bad. but that's why they report because they do well. the ones that aren't doing well, most others, are going to have nasty results. >> a pretty ugly earnings season. >> i think it will be horrible. >> horrible? >> yeah. people do not understand i think right now just how choppy it is and how weak the consumer is right now. as a consumer, get back to the traditional retailer. >> making choices about what they want to spend money on. you have a certain amount of money and you make decisions. >> you make decisions. >> have we seen this kind of thing before, this is cycles. >> no, this is why we think we're in a whole new paradigm. whenever have we had smartphones that you can order on amazon and the more you sell, the more you buy on amazon.
it becomes this wonderful cycle for amazon and all online retailers. they're spending much more money on internet and doing a great job there, too. you have a whole new paradigm of what's going on in retail. >> you haven't been with us in some time. but we've had a chance to j.c. you. you were very negative when mr. johnson took over and wondered about the future of the company. i put it to you now with continued turmoil in the boardroom and question as to mike's leadership there. >> j.v. penny has long-term issues they actually had before the new board made the change in leadership, and that's really a function of where they are, fighting against kohl's and somewhat macy's and target and walmart to contend with and sears and you have all of these guys and who are they, what are we going to be? do they deserve so exist? these are existential issue that is affect the very -- whether they will be around or not. the board came in with a new
management, johnson, and he really messed things up so badly with the strategy that no one understood and didn't make sense and the board allowed him to go on way too long and a few months mark took over and no one could have turned this thing around in a few months. you're asking too much. this is not a turn around, this is a double turn around. this is a miss like have you never seen before. you lost the customer. you're changing prices. no longer discounting. it is just too much to change. can mark ul man do it? i don't know if anyone can do it. the issue, he needs time to give it a chance and it is just a very tough space. >> we have to leave it there. appreciate your insight. >> thanks for having me. >> very big headline there from you. we're going to keep an eye on retail. simon, back to you. >> thank you. up next on the program we'll take you inside this wine cellar where the wine alone is worth
millions of dollars. wait until you find out how much the whole thing is worth. >> and later why these cats are the new face of journalism. we'll be talking to the editor in chief of buzz feed. stay with us. ♪ [ male announcer ] you wait all year for summer. ♪ this summer was definitely worth the wait. ♪ summer's best event from cadillac. let summer try and pass you by. lease this all-new cadillac ats
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welcome back to the million dollar minute. we take you inside a six figure wine cellar where he keeps the liquid assets that are in fact worth millions of dollars. robert joins us with more. >> good morning, kelly. i think we have this million dollar minute that should cue up in a second. we're going inside a high tech wine chamber worth millions. >> this is a beautiful cellular owned by one of our clients in the new york city area. >> for security and privacy reasons we have been asked not to reveal the location or the owner. >> this client spent nearly a million dollars just building this space that you see before he brought in the wine. >> all 6,750 bottles have been barcoded for tracking.
>> so the client knows not only what each bottle is, where it is, what it is worth, whether the values are going up in the marketplace or down. the most valuable wine in the tlekz is this 1949 bottle worth $30,000 in today's market. >> to ensure it is kept at a perfect temperature, the room is wired with special lighting that doesn't give off heat. >> the collection is worth about $3.5 million. >> that brings the total for state of the art climate control and this collection of liquid assets to about $4.5 million. >> wow. so, robert, how much did you say that was worth? >> 3.5 million. the business of wine storage has just become huge. the total sales at auction last year was around $400 million of collectible wine. the business of storing wine and not just building the actual storage but the software has also become a huge and growing business. kind of the economy that we rarely look at.
>> that's for sure. one that is potentially becoming more important as well. robert frank with that million dollar minute. great to see you today. >> thanks, guys. >> tweet time, blackberry formed a special committee to explore strategic alternatives including sale or joint venture. we just don't know. we're asking you who is the out of the box buyer for blackberry and why? your responses coming up. [ male announcer ] come to the lexus golden opportunity sales event and choose from one of five lexus hybrids that's right for you, including the lexus es and ct hybrids. ♪ this is the pursuit of perfection. ♪ it's been that way since the day you met. but your erectile dysfunction - it could be a question of blood flow. cialis tadalafil for daily use helps you be ready anytime the moment's right. you can be more confident in your ability to be ready. and the same cialis is the only daily ed tablet approved to treat ed and symptoms of bph like needing to go frequently or urgently. tell your doctor about
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we'll let you go until you rejoin us tomorrow. >> perhaps later today. one never knows if there will be news. >> or a short day and you will be at lunch by 11. >> no. >> it is merger monday after all. here is what you may have missed if you are just tuning in. rjts welcome to "squawk on the street." here's what happened so far. >> back berry has been halted. they announced they're seeking strategic alternatives and open to a joint venture at the company or possibly a sale or other options. >> maybe microsoft says, listen, we can merge this with the noe kia platform, put together something that no one wants. >> right.
>> windows 8.0, no one wanted it. put this together and a big pile no one wants. this is incredible. how about an apology? >> how about selling your stock? >> how about making a bid? do you know that gek owe looks like in he looks like ghandi. this is ghandi 2. he is back and bigger than ever. >> a teammate, a friend of mine and i played with him for six years. it is tough to be objective and at the same time you can't cheat and it is simple. ore the myth like we rolled over the great fiscal cliff last year into 2014 without fed support and that might even lead to higher confidence that the economy is standing on its own two feet. >> we're combining capabilities of rockwell collins for on board aviation equipment with the ground based networks that he has.
>> good morning to you if you're just joining us. we're live at post nine of the new york stock exchange. have a quick check on the markets. negative territory earlier today. you can see certainly the dow and the nasdaq pulled higher and a lot of tech movers including linked in and rallying after upgraded to buy over at needham, citing potential growth opportunities and including the new sponsored update feature. shares of apple also trading higher this morning according to all things d. apple will announce the latest version of the iphone at an event on september 10th, speculation is centering on the new phone with a fingerprint sensor and the low cost version we have spoken about so many times. >> to the road map, this spells trouble or maybe it could. blackberry making a last ditch effort to save its business forming a special committee to examine strategic alternative.
shares are higher. we're take at closer look what they can do to save itself and the future of transportation coming soon. we'll take i closer look at what it is and what you can expect from it and also twitter coming to washington, the social network forming a political action committee and appointing the first registered lobbyist. we'll talk to the editor in chief of buzz feed about the intersection of technology and politics in washington. >> the street seems to be welcoming back berry's news it is exploring strategic options for the company including we assume a sale. we're higher, up 5%, 10.26. kevin is an analyst and hasable under perform rating on the blackberry. what do you think of today's news? >> i don't think it is anything new. we know they were exploring strategic alternatives for quite some time and had informal
discussions with a number of strategic partners over the last several years, and nothing has come out of it. you know, our concern is that the announcement today is going to put pressure on blackberry's enterprise in government subscribers who may have been on the fence regarding an upgrade to the q 10, that they're going to abandon blackberry because the concerned the company won't be around under the existing management team in the next 6 to 12 months. this may accelerate subscriber losses and cash burn. >> so why would they make that announcement in the knowledge that it could harm the business? >> i think that we estimate they will burn between 250 and 300 million per quarter over the next several quarters. i think the board is finally acknowledging that time is not on the company's side and they need to get to a sale quickly before the cash erodes. i think it is basically inviting all interested parties to do due
diligence and we just don't see enough upside here. we have a 9 dollars target and i think that in the unlikely scenario that somebody puts value on the hardware business, you could get to $12 at the high end but we certainly would not be buying the shares at current levels. >> which is the most likely, private equity will make a purchase or that the chinese would try with all of that entails for the canadian government and government contracts in this country? >> we think it will be -- this is a very different business than dell. there is -- this company is burning cash as i said at a rate of probably 250 plus million dollars a quarter, and as a result i think it is going to be unlikely that a financial sponsor will be able to leverage the balance sheet to take this company private. we think it is probably a
combination, a take under from one or more strategic buyers, probably at a lower price. we could see some of the handset vendors looking at the asian and latin america distribution network for hardware and maybe one of the u.s. enterprise players paying a low price for the knock and residual services revenue. >> there was a line in the copy about this talking about the involvement of a silver lake or the tie up with a company like dell. you do have kind of these two businesses, dell and blackberry, both whose fundamental sectors or at least what they do seems to be in decline. what do you think about that? is that sheer speculation or are there any synergy that is could be unlocked there? >> we don't cover dell, so i am not going to comment on specific synergies with that company. clearly some of the legacy technology companies out there have been struggling with the transition to mobile and
blackberry has at least today a large enterprise mobile customer base, so i can see on the surface why some of the pc vendors could be interested in this technology but i just don't see why they would pay up for an eroding asset. >> kevin, stand by. want to bring in a writer from the "new york times." mike, thanks very much for your time and wonder what you make of the statement this morning and what you think is next for this company? >> well, it seems like they're a bit more serious about it. last year they said they were exploring strategic alternatives and this time they said that they have actually formed the committee so i think they're looking a bit more seriously. the question is it is a year later and blackberry still struggles, fallen behind windows phone according to a survey so who would be interested in this and i think what may end up happening, a lot of people seem to think so, is that they will actually just end up selling off parts of the company rather than the whole thing.
>> i think that's exactly what kevin was suggesting to us that some of the asian handsets manufacturers may take the asian operations and perhaps an enterprise buyer here in the united states. any idea of what valuation that may take you to? kevin seems to be very pessimistic about the stock and thinks it is hard to achieve that justification. what do you think? >> i read a recent analyst report and some people seem to think that the patents could fetch about 1 to 2 billion, and that figure has been floating around for a while. i don't think will you get a huge windfall from any sales here. we could be proven wrong. i think that a lot of people have already looked at blackberry and passed. they think it is very tough for them to get a whole lot of value. >> it is a message we keep coming back to. kevin, before we let you go, what is your main idea at the moment from where do you think people can profit that are watching you now? >> our top idea is t-mobile in
the u.s. telecom space. we think they have excellent subscriber momentum on some creative marketing plans and they're going to continue to take market share away from verizon and at&t and we think that the stock is still attractively valued and could trade up to $29 target over the next several months. so that's our favorite idea. we also like on the long-term basis american tower, crown castle, and fundamental players on wireless data, great business models and under perform to date and we think they will have a good 2014. >> good to talk to you both. thank you for joining us. kevin there. have a great week both of you. all of this discussion about blackberry's exploration of strategic alternatives got us thinking this morning, the subject of squawk on the tweet, who is the out of the box buyer for blackberry and why do you think? tweet us. we'll air your responses later in the hour. >> now to the next fiscal fight
in washington. while most of the talk on wall street has involved fed tapering, the fight over the debt limit and funding the government is about to take center stage when congress returns in september. just how big of a threat is it to the economy really? let's ask dean mackey, chief u.s. economist and brian west berry with first trust advisers. good morning. >> good morning. >> dean, it is a little troubling to read in politico and elsewhere reports about how you have the gop certain key players like mcconnell involved in challenges from the right in terms of their election cycle and meanwhile everyone insisting no one wants to shut down the government and then players also saying they want to use the continuing resolution to did he fund obama care. with all of these things happening how concerned are you about the potential for disruption to the economy and had the months ahead. >> certainly something we have to be concernedes about. the consequences of not raising the debt ceiling would be quite large. i don't think that it is likely, though, that we get to that
point again. i think that enough lessons, i hope that enough lessons have been learned from the last go around that we won't go there again. >> what do you think has changed? we know it would have consequences for the economy and know it is something that wouldn't make us look great for the international community. we also know that politics is politics. you look at the resignation of key staffers in washington that worked on this in the past and wonder if they see the writing on the wall it will go down to the wire and be a tough fight again? >> it certainly could be. i think that from what i have heard the republicans have decided that it is not in their interests to really push this to the limit the way that it was done a couple years ago. that's my guess. while we will see posturing on both sides, ultimately an agreement will be reached. >> what's your take on all of this? >> sure. i think this idea that somehow we would default on our debt if
we let the debt ceiling come into effect, in other words, if we weren't allowed to issue any more debt, i just don't agree with that at all. we can pay every dime of interest that we owe on our debt. we can roll over the principle when it comes due. we will not default on our debt. count me in the camp of the extremists. i hope they do take this to the wall. the federal government is way too big. it needs to cut itself back. if it can't do it, you know, on its own, with political debate and voting, then maybe we need to take away the credit card, and i am not worried about that. i think if we were to do that the financial markets would say, finally, washington is getting itself under control. i want this to go down to the wire. my final point on this is i was there in 1995 and '96. i was the chief economist of the
joint economic economy of congress and the government was shut down and twice when bill clinton was president and it led to a huge decline in the size of government and a boom in the u.s. economy in the late 1990s. i want to see that again. >> brian, the landscape looked very different this time as we look over the next couple months and the possibility that the growth in this country could begin to accelerate two, three, 3.5% for the next three years which is what we're hearing from a number of people, how excited are you by that? what does it mean next year the
fiscal drag will fade. we think growth picks up, but i think we're not going to get to that 3, 3.5% growth limit. >> dean, just briefly, what about in the meantime if the fight over the federal reserve over bernanke's successor is drawn out because of politics? is that a concern? >> i think that uncertainty is always a negative for markets. the longer it drags on, i think it could be a concern. i doubt this is a real game changer for markets. i think the president is likely to announce someone who is largely sympathetic with the current course of the fed. >> okay. maybe a rules based approach at this point. leave it there. gentlemen, thank you very much. >> thank you. >> probably one of the craziest moments will you ever hear on a conference call. you want to know exactly what the ceo tim armstrong said in front about 1,000 employees and we'll have that when we come back.
musk. and not sure that has immediate market consequences given we won't actually get a lot of detail. >> well, we'll see. we'll see. my pet is that it is magnetic levitation. >> mag-lev. >> and approximate you pull it up and it flies over the top. >> that's a new one for me. i will keep an eye out for that announcement later today and from l.a. to san francisco in 30 minutes as we're talking about, that's what they're promising. he is going to unveil details coming up. we'll talk to someone who covered him for years and tell us what we can expect. as we go to break, you might ask yourself why are we showing you a whole wall of cats? the answer has to do with social media, washington, and the economy. that's right. we'll explain when squawk on the street returns. (announcer) scottrade knows our clients trade
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this is one of the craziest things you ever hear on a workplace conference call. tim armstrong actually firing someone on the spot on a call to about 1,000 aol employees. julia boorstin has more live from los angeles. julia. >> simon, aol ceo tim armstrong told employees that if they're not on board, they should just leave the company. media blog secured a leaked clip from the conference call. take a listen. >> do you think what's going on right now is a joke, and you want to joke around about it, you should pick your stuff up and leave today and the reason is, and i am going to be very specific about this. from an experience, put that camera down right now. you're fired. out. >> the able he is referring to is the creative director of patch and reportedly regularly
took photos during meetings and his linked in profile says he is still employed at patch. if he was indeed fired he wouldn't be the only employee to get a pink slip. aol wants to close or find partners for 400 of the 900 local news sites and is laying off more than 1,100 employees. he may be particularly sensitive about the weakness because he co-founded it and sold it to aol in 2007 before joining the company as the ceo two years later. now, this comes as a bit of a surprise considering armstrong's success turning around aol's reputation and boosting the stock 63% since he pam ceo and has been well liked at aol and in the previous role at google. we reached out to aol multiple times since the tape leaked. we have not heard back yet. over to you. >> all right, julia. tough day for that employee. thanks very much. imagine going from l.a. to san francisco in 30 minutes. that may sound a bit farfetched.
if elan musk has his way the hyperloop will make it possible. he is expected to unveil the design today. more insight on the latest venture. guys, good morning. go. >> good morning. >> han a first of all, have you gleaned anything about the hyperloop and the intentions here from spending time with him? >> unfortunately i haven't. the most recent word i have from elan is what he told reporters on a conference call last week which is that he might have stuck his foot in his mouth a little bit when he started talking about the hyperloop because it is highly speculative. >> it is interesting, right? given that, and the fact that a lot of people after he made this announcement or sort of saying, okay, well, it is suggesting all of these promises, can you follow through? it doesn't sound like we'll get
more detail today. >> it will be interesting to hear what he has to say and he said it is an open source idea and he is hoping that a lot of people contribute, so we'll find out a lot more today, i hope. >> drew, is this a step too far for elon musk? >> i give him a lot of credit actually for that comment that hannah referenced to say i may have stuck my foot in my mouth. he is clearly a big thinker. he has been a big executer with tesla, with space, and he has a lot of credibility. and i give him credit. he seems like he is acting as a mature ceo to say, hey, this idea is within my realm that i should pursue and maybe this one is a little out, but i still want to contribute it to the world and hopefully have it be brought to be even if i don't bring it into reality. >> we're all scrapping around as to what it actually might involve. i think you have been to his house and obviously interviewed the guy a number of times and did you glean anything?
did you see anything while you were there that might indicate what it might be, the hyperloop. >> the closest thing i can think of is an air hockey table and i think in fact elon mentioned we can consider something across between a rail gun and air hockey table and concord jet. elon is famously really interested in video games and futuristic ideas like that. he definitely thinks we should be working towards colonizing mars. >> indeed, yeah. drew, let me very quickly change the subject if i may at the end. we've had a downgrade today of tesla which obviously when we said that at the beginning suggesting it has gonl from buy to neutral because the risk reward is less compelling after the recent price appreciation and they say the current share price fully captures tesla's evolution into one of the most profitable luxury auto manufacturers with sustained annual volumes and margins similar to porsche. would you agree the stock will find it difficult to struggle from here?
>> i think that that same comment could have been made and probably was made at $40 and $50. i think that we have two moving forces here, one is the price and valuation of the stock and, two, is the execution of the company and frankly what elon has been able to do in terms of quarter to quarter developments and also the vision that he articulates going forward. and so i don't think you can discount the position that he has put the company in to disrupt the auto market, so, sure, there is a case to be made that the stock is over valued, but there is also a pretty decent case to be made that this corporation is going to capture a significant share of the value in the overall global auto industry. >> and for that reason, drew, sticking with the shares at least for now. drew and han a thank you very much this morning. >> thank you. >> pleasure. >> we have been talking about blackberry a lot this morning and the company forming a special committee to explore what they describe as describe
alternatives including presumably a sale or a joint venture that brings us to squawk on the tweet. who is the out of the box buyer for her blackberry and why? tweet us. we'll get your answers later in this hour. plus the bells are about to sound across europe. we'll have the close and the details on the impact in the u.s. right after the short break. we've been bringing people together. today, we'd like people to come together on something that concerns all of us. obesity. and as the nation's leading beverage company, we can play an important role. that includes continually providing more options. giving people easy ways to help make informed choices. and offering portion controlled versions
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european markets have closed. how are we starting off the week. >> you can see slightly higher to the east, slightly lower to the west. the big news will be about growth on wednesday we'll probably get confirmation the eurozone at least came out of recession in the second quarter and the big question for an investor, are you going to be able to make up the under performance of european equities against for example u.s. there is a substantial gap moving forward. jpmorgan raised its european overweight saying they're aggressively overweight, equities versus cash and fixed income and getting more positive on europe. it is interesting also opening a cyclical versus defensive sector overweight around the globe. some of the industrials were lower in europe. let's have a look at where we are on some of those. you see negative territory
there. the other thing that will happen this week importantly in germany is that merkel returns from holiday and will start making speeches again from wednesday? advance of the german election september the 22nd. the thorn in the side over the weekend was that the bank apparently has a report that is sitting on in which it basically said greece is going to lead another bailout and something that of course is not very popular in germany and some of the german politicians, the opposition, german politicians suggesting she has not been completely forthright with the degree to which greece will require another bailout. we had detail today. it continues to contract down 4 to 6% in the second quarter. it now lost a fifth of its economy. >> and that's brutal. that's a depression. frankly, this goes back to 2007. i believe the recession, they're in the sixth year of recession in greece. >> yep. >> troubling. simon, thanks very much for that. let's get a check on energy and
commodities. sharon is live from the nymex. >> let's look at the gainers for monday and they are in the precious metals arena. we're looking at gold prices now at the highest level in nearly two weeks, up almost $30, right near 13.40 an ounce and appears a lot of the bears are cashing out. when you look at the commitment from traders and the fact we're seeing them getting back into the market and bears having to cover their short positions, we're also noticing according to georgia at rbc capital markets we have seen positive data in terms of the improved outlook out of china and auto sales are better and that is helping a bit and a lot of the rotation out of equities and into gold may be helping as well. keep in mind that a lot of traders are now talking about the fact that maybe we will continue to see qe. maybe we won't see tapering in that september meeting and so that is another reason why we're likely looking at another leg higher and physical demand helping the situation. in terms of what we're seeing in the etf market, that is also
helping the gold futures and the fact that we're looking at the fourth straight day of gains in terms of the gold market because we're also seeing some inflows into the etf market and we haven't seen that really since the middle of june. that is a significant development there. silver is getting a rise here as well. we're looking at silver gaining ground and even natural gas looking in the energy sector with revised weather forecast. we'll get warmer temperature coming later in the month perhaps and that is helping natural gas. back to you guys. . >> thank you very much. just over two hours into floor trade at the new york stock exchange. >> we're in positive territory, dow just moved into positive territory a short while ago. i want to go back to the story on the front page of the journal today. emerging world loses grossly. this is a great story. the problem i have with the story, theres in doubt that a lot of people are shifting their emphasis to the united states and the emerging markets had their moments of doubt and pain five or six months ago and they sold off. it is buy low, sell high, folks, that's why china is moving up. that's why the momentum is
shifting back to the emerging world. look, put up china versus the s&p. we started having growth concerns about china back in march and as a result we saw the chinese market move to the downside rather dramatically. chinese stocks are down 10% on the year. the u.s. is up 20%. again, buy low and sell high, there is the chinese market. it is just starting to peak off out of the cellar. when you see the economic numbers, this is what everybody is talking about. the numbers started to turn around already, and that's what's got people starting to be interested in what's going on in china. imports up 10%. we saw exports up 5%. we saw electricity usage, this is what everybody watches. they say you can't fake this one, bob. up 8.1% for july. those are really good economic numbers and you can see the effect this is having on the stock market overall, the china numbers, so look at kohl's stock for examples. coal stocks have had a rally in the last four days up almost 10%. same thing with steel stocks. steel stocks rallied, the minute
we started getting the economic numbers last week, the steel stocks and these are etfs, you can buy them and also rallied about 10%. commodity rich countries, all started moving up can last week and again today look at china, brazil, australia, all moving to the upside. get the point, china is hot again. here is the other thing. teches are out performing today and look at the numbers here. five networks did well and apple on the new iphone talk and apple sitting near a six-month high. the important thing and finally before i go, put up biotechs, there is the former leadership group that now has fallen down. they're breaking the trend line and this is a little bit disconcerting. this was the biggest market leader of the last six months. housing broke first. now biotech is starting to slow down a little bit. watch that. >> do you want to know what the real news is? a one column, what's news box, and they say they will stick with this. people looking at two-column what's news for better than -- >> 20 years. >> exactly. you shrink the size of the paper
and the what's news box. >> less news. that is news. >> thank you for pointing it out. i didn't snow. >> big change. keep an eye on cyclicals as he mentioned and watching the restaurant space, fast food versus fast casual. if you're looking to invest in eating, where should you put your money? we'll get you the answer when "squawk on the street" returns. in today's markets, a lot can happen in a second. with fidelity's guaranteed one-second trade execution, we route your order to up to 75 market centers to look for the best possible price -- maybe even better than you expected.
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this facility behind me, 115,000 square feet, this is where the popcorn is popped and it is stored before it is shipped. this company went from a retail plolgds to a wholesale model in 2006 and now they are in places you know, walmart, whole foods, walgreens and number one in those stores. it is a rapidly growing business for them and the industry overall. let me give you the stats here. sales are estimated to be roughly worth $16 billion a year. that's overall snacks. when we are talking about ready to eat popcorn, it is about half a billion dollars. the growth rates we have seen over the past few years, roughly 4%, and that's doubled now to 8% and the ceo of popcorn, indiana, expects that to double again in the next eight to ten years. the question is what is it about this popcorn that people like so much? it has a few key attributes. first of all, it is all natural. it is gluten free. it is a non-gmo product which is important to a lot of people. zero transfats, low carb, really
hard to find these kinds of traits in a snack. >> 60% of the people in america consume snacks yet 87% are looking for healthier snacks. okay? so everybody is looking for that healthy snack piece, and i think people are gravitating towards popcorn because the inherent benefit is getting more and more widely known. >> that doesn't mean there aren't challenges in this business. of course there is competition from large and other small players out there. a key of course is staying fresh and anticipating customer needs so that this doesn't turn into one of these situations that is a fad that slowly dies out, and of course are you dealing with rising commodity costs as well, so managing their costs and at margins and pricing. innovation is key. it is knowing what the consumer wants before they want it. for example, they have the traditional kettle corn brand here, but they're also making dark chocolate chip kettle corn
and peppermint kettle corn and my favorite which of course i dug into already, the greek yogurt drizzle the kettle corn. it is delicious. >> talk about the collaboration of like four food trends in one, jackie. looks delicious, though. by the way, that can't be too far from the office. >> do bring a hair net back for kelly. >> exactly. >> popcorn and a hair net. >> perfect. >> low carb popcorn. >> a bright blue one, please. >> if your portfolio needs something a little more filling than even popcorn, americans are frequenting fast food restaurants it appears now less often according to a new gallup poll that says 47% of people eat fast food at least once a week. that's down from 56% in 2006. now, to reinvigorate sales some restaurant brands are clearly turning to attention grabbing menu items while others are turning to healthier options. joining us now to share their insights on the restaurant
sector, nicole miller, a senior research analyst at piper jaffray and rachel rothman from susquehanna financial group. rachel, let me kick off with you. what is the state of the restaurant industry at the moment for shareholders? where can you make money now? >> it is pretty tough in the restaurant space. we have seen a tremendous amount of multiple expansion and disappointing sales and earnings generally have been under pressure. our advice as far as restaurant goes would be to stay with those chain that is have scale and like mcdonald's or generally look elsewhere within retail or in other consumer orient the sectors that are more attractive at these levels. >> what about this move to less volume overall and healthier options within that, rachel? does mc d stack up? >> mcd is doing a pretty good job. they introduced the egg white breakfast sandwich in january and have new snackable items which are doing okay. granted, it is not healthy which is i think what you are referring to but there are worse things out there.
>> it doesn't have to be healthy. it just has to make people think it is healthy. >> exactly. exactly. >> nicole, i am curious, though, if fast food has finally learned a little bit of a lesson from the success of the fast casual space and i think about the pretzel bacon cheeseburger at wendy's. a little bit of an example of food innovation and this success of which by the way for the comps which look like they could be strong in the third quarter, do you think there is any chance the fast food segment fighting back here? >> the fast food segment is much healthier right now than the overall casual or full service segment. that being said, there is a blurring of the lines. fast casual was out performing probably for the last decade and to your point on qsr, it made fast food become more authentic and have some sort of at least healthy halo and made them have better looking restaurants. they had to remodel. and they had to really bring value to the table. >> and given that, if you had to buy shares of one or the other
here, where do you see the most value and is it possible that fast food again combined with some pressure on the middle swath of the u.s. consumer base could start to claw back some of that traffic? >> well, we actually look at the industry very favorably. we are year two into a five to seven year expansion cycle for the industry, both multiples and earnings, so i wouldn't look to invest in just qsr or just casual dining. i would be looking at the market share takers in each category. >> which would be the top of your list, nicole? >> we love starbucks, noodles, cheesecake factory, those are some of the few. >> i didn't mean to interrupt, nicole. rachel, what's your top pick? >> mcdonald's. i think nicole does make a good point about focusing on those company that is have more traction with respect to same-store sales and there is definitely the haves and the have-nots and the price point she is referring to, they have
had less pressure than some of the lower price point companies out there. >> we'll leave it there. thank you very much. have a great week. nice to see you both. >> my stomach is growling. twitter coming to washington, the social network hiring its first lobbyist on capitol hill this week just like a grown up company. we'll talk to ben smith about the intersection of politics and social media when we come back. you won't want to miss it.
welcome back. the social media giant is forming a political action committee. our guest guest weighs in on fwiter washington and will sit down with anthony weiner tonight. we hope to get your thoughts on the fact that twiter is starting a political action committee and starting to get into the lobbying business. does that point towards the company going public? >> i don't know about that. i think it is really clear that they have become this kind of central platform for politics in a way that i guess a few years ago you may say the blogosphere was, a place where all of the political leaders not only are watching and putting out press releases and starting to engage and mike news themselves t does make sense they're going to start having political conflicts
and political interests and they'll want to attend to. >> and how old is buzz need for you and as the site degrees and takes share from traditional media outlets like the "washington post," how much are you thinking about twitter as a tool, a competitor, as a rival, as an opportunity? >> i think we see twitter as one of the central places of conversation particularly around hard news, politics, business, going on and a place we hope people will read and share our stories and we're looking to find a conversation that we can advance. >> do you think that twitter in the way that it promotes links which are short and clickable and may catch your attention with the pictures and something goofy, is that -- does that feed off buzz feed and does buzz feed feed off twitter? could buzz feed exist without twitter? >> we exist on the premise that people are coming first to these social platforms and facebook and twitter and looking for great stuff they want to share and the friends are sharing on
the pratt forms. it is like the core of how it will be distributed for quite a while now. >> and fascinating to see the success of your business what you have done with for example the gifts of caps or whatever it is. talk us through what is a hard core of solid journalism and then this very innovative way of attracting people to the site? did you dream it up? >> buzz feed has been around since i think 2007 and really the started as a laboratory. when facebook was young and people were sharing were cat pictures and pictures of their kids and then pictures of other people's kids and eventually that becomes hard news. they love to share cat pictures. i think the notion you mix these up which seems five or ten years ago crazy is everybody's day-to-day experience in the twitter and facebook feeds. a hard news story next to a cute
picture. >> and i am sure that's what you told the advertisers. how do you know that people are and just not forwarding the pictures of the cats? >> i think certainly we see traffic, lots of traffic to both. animals are 6 or 7% of traffic and we do lots of different stuff. i think the do he will is most humans really love animals and also have other interests. that's not actually a revelation. >> do you think you're responsible for the demise of the "washington post"? >> seems like it is no longer a demise. think of the damage you can do putting $250 million into a news organization. it is pretty good. >> what would you do if you were, jeff bezos here or you were responsible for turning the "washington post" around? >> i think it is a huge challenge to have to print a newspaper and to organize yourself around printing a physical newspaper. i wonder how much longer they keep doing that. >> ben, just changing the subject slightly, i know you are going to interview anthony
weiner tonight. when next do you take that story? >> it is certainly an interesting moment. when we booked this interview, he was top of the polls and now he is i think like 10% and 75% of new yorkers have a negative opinion of him. i think it is interesting, you know, like how that happened, how people like him less than they liked bill clinton in the midst of his problems and there is big news in new york. a judge ruled against stop and frisk and i am interested in weiner's views on that. >> you wouldn't be doing this interview of anthony weiner didn't generate a lot of hits. >> this whole race in new york resolved around him. he may not win it. he may not not ultimately in the run off, the central player, but just the entire race has been shaped around him and he is the character i think people are most interested? >> would you be involved if this were just christine quinn versus bill deblazio. anthony weiner transcended the importance or relevance to you guys so something that is more frankly of a celebrity moment
and then able to take advantage of that. >> we love politics. people on the internet love politics. we have always -- new york mayor's race, you always think it will be a local contest, you don't care about every time there is some -- every time there are big characters and something interesting going on, this time certainly it is weiner. >> and i see you think that the weiner scandal is in the great tradition of washington politics. >> you know, i think it is a bit of a new tradition, right? the digital, it is i think he is a pioneer in fact. >> should have used snap chat perhaps. >> that seems like a really good question. maybe i will ask him. >> please do. thank you very much for joining us this morning. giving people a sense of how journalism is changing online. >> we have been talking all morning about blackberry forming a special committee to explore strategic alternatives including potentially a sale or joint venture and that is the subject of the squawk on the tweet. who is the out of the box buyer for her blackberry and why?
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welcome back. let's see the responses for our twitter question this morning. blackberry forming a special committee to explore strategic alternatives including a sale or joint venture. we asked you who might not out of the box buyer for blackberry and why? bezo as to add to kindle and the post and maybe somebody like microsoft for security reasons although the chinese are the significant suitor and apple none buys blackberry because they need a smartphone line and always, is that the name here? always tweets smuckers. what do you think about that. >> smuckers in i think bezos is a better idea and he can buy it with his personal fortune and not notice a difference. >> i like the qualification
we're watching markets as we have seen slight positive move the dow shedding about 8 or 9 points. we'll see what happens as we move throughout the session. >> it is the summer. that is it for "squawk on the street" on monday as we hit noon time on the east coast and let's get to the fast money halftime report back at hq. have a great afternoon. welcome to the halftime show. four hours to go until the close. take a look where we stand on this monday on the streets. a mixed day, dow is down fractionally as the s&p, nasdaq moves higher. black and blueberry, as the beat down company considers its future, we consider the stock and whether it is dead money or worth a shot. testy over tesla. one wall street firm down grades the hottest stock on the street today and greenberg is all charged up over it. he will take on the traders just ahead. first our top story countdown to the